investing in small food enterprises · 2017-03-10 · of investing in 968 local, organic, and...

S TAT E O F T H E S E C T O R R E P O RT

2014Investing

in Small Food Enterprises

STATE OF THE SECTOR REPORT

2014Investing

in Small Food Enterprises

Slow Money is a 501 (c) 3 dedicated to catalyzing the flow of capital to local food systems, connecting investors to the places

where they live and promoting new principles of fiduciary responsibility that “bring money back down to earth.” Through

local networks, investment clubs, regional events, national gatherings, BEETCOIN campaigns and the Slow Money Princi-

ples, individual investments ranging in size from $25 to $3 million have been made in support of small, local, organic farms

and food enterprises, mostly in the U.S., but also in Canada, France and Switzerland.

A special thanks to our friends at RSF Social Finance for their support in the production of this report.

INTRODUCTION by Woody Tasch 1

STATE OF THE SECTOR by Amy Dickie 5

STORIES | ENTREPRENEURS 17

STORIES | INVESTORS 39

1

INTRODUCTIONOPENING LETTER FOR SLOW MONEY 2014

by Woody Tasch

In calling this a State of the Sector Report, we must first start with the most obvious

questions: Do small food enterprises and local food systems comprise a defined economic

sector? Can investors who allocate money to such a sector achieve predictable, risk-

adjusted rates of return?

Although a number of niche funds pursue risk-adjusted rates of return in farmland

and ranchland and later-stage food companies, investing in a new generation of small

and mid-size organic farms and the processing and distribution businesses that will

bring their produce to market is very much an emergent activity. Despite a few decades

of relatively robust activity at the level of farmers’ markets and CSAs and the growing

awareness of the importance of organic and local, only 4 percent of the U.S. food indus-

try and 1 percent of U.S. farmland are organic. The pendulum of industrial agricultural

and food systems is still swinging in a broad global arc toward commodification, speed,

scale, and efficiencies that are achieved by over-reliance on petrochemicals and the ex-

ternalization of long-term social and environmental costs.

A few studies have been conducted in recent years to shine a light on the entrepre-

neurs, investors, and philanthropists who are working to rebuild local food systems.

These include Promoting Sustainable Food Systems Through Impact Investing (Springcreek

Foundation, 2012), Local Foods: A Guide for Investors and Philanthropists (California

Environmental Associates, 2010), Community Food Enterprise: Local Success in a Global

Marketplace (Wallace Center at Winrock International and The Business Alliance for Local

Living Economies, 2009), studies of the economics of localizing food production and

consumption in Cleveland and Boulder (Michael Shuman, 2010 and 2012), and Trends in

Sustainable Agriculture and Food Systems Funding, 2003–2006 (Sustainable Agriculture &

Food Systems Funders).

INTRODUCTION | WOODY TASCH

2

Slow Money 2014: State of the Sector Report offers data and narrative to further these

field-building activities and the public conversation that accompanies them. Investing

activity of the Slow Money network provides a starting point, to which we have added

data from a survey conducted for us by California Environmental Associates.

From 2009 to 2013, $31 million flowed through the Slow Money network to 246

small food enterprises, primarily in the United States, but also in Canada, France, and

Switzerland. This funding occurred primarily via local networks and investment clubs

and, occasionally, through national gatherings. Because this process was driven by dis-

tributed nonprofit local networks, centralized data collection and portfolio analysis are

subject to inevitable constraints.

In addition to data from Slow Money’s direct experience, we have collected and ana-

lyzed data from 42 survey respondents. The survey provides an overview of $293 million

of investing in 968 local, organic, and sustainable food enterprises from 2009 to 2013.

While we recognize the limitations of the data, we also recognize the significance of

pattern. The pages that follow evince a pattern of entrepreneurship, stewardship, pru-

dence, and risk-taking that is integral to the emergence of local food systems, in particu-

lar, and a restorative economy, more broadly. These are the elements of a new narrative.

We hear from emergent nurture capitalists—fiduciaries that are working to balance

financial returns with patient strategies for promoting carrying capacity, sense of place,

and soil fertility. We hear from what one of Wes Jackson’s neighbors calls the “heroic

grunts”: small farmers and food entrepreneurs who are rebuilding local food systems.

We hear from a new breed of individual investors who want to know where their food

comes from and where their money goes, and who want to align money and values in

the most tangible and pragmatic ways possible.

These stories are included here as reported by entrepreneurs and investors, in their

own words. Most of the entrepreneurs and investors included have been active partic-

ipants in local Slow Money networks. In a few cases, the entrepreneur or investor has

not been directly involved in a Slow Money event or investment, but their activities are

closely aligned and their voices very much a part of the broader conversation.

INTRODUCTION | WOODY TASCH

3

A few fundamental tensions of theory and practice bear calling out before proceeding.

There is the tension between small, distributed investments and large-scale systemic

change. There is the tension between the local and the fiduciary. There is the tension be-

tween efficiency and diversity. There is the tension between data and narrative.

I think back to my trip to Slow Food’s Terra Madre event in Turin in 2008, during

which I came upon an International Herald Tribune story titled “At the Crossroads of

Finance and Culture.” We are still very much at this crossroads. The work of organic

farmers, local food entrepreneurs, and the funders who are supporting them is helping

steer us in the right direction.

Woody Tasch

Founder, Slow Money

5

STATE OF THE SECTOR REPORT | 2014INVESTMENTS INTO SUSTAINABLE, LOCAL, AND ORGANIC FOOD, FARMING,

AND RANCHING ENTERPRISES IN NORTH AMERICA | 2009–2013

by Amy Dickie

ABOUT THIS REPORTSince 2009, the Slow Money network has been cata-

lyzing investments into local, sustainable, and organic

food, farming, and ranching enterprises. More than

$38 million has been invested into over 350 deals, as

a result of Slow Money local activities, regional events,

and national gatherings; $31 million of this is covered

by the following analysis.1 In the summer of 2014,

Slow Money surveyed dozens of individuals and orga-

nizations that are supporting local food systems and

sustainable agriculture.

METHODOLOGY With input from a few experts from the Slow Money

network, we 1) designed a survey to capture the scale

and characteristics of investments into this field from

a wide range of investor types, and 2) developed a list

of respondents. The data that follows is the result of

responses from 32 investment funds, family offices,

and foundations, as well as ten Slow Money investment

clubs. We augmented the survey with direct interviews

with a subset of the respondents. The details of the sur-

vey methodology are available upon request.

The period covered by this study is the five years

from 2009 to 2013, corresponding to the first five years

of active investing through the Slow Money network.

THE STATE OF THE SECTOROur survey and the Slow Money investment data-

base together tracked a total of $293 million invested

into 968 deals during the period of 2009 to 2013. We

believe this constitutes a meaningful percentage of

overall activity in the field; however, the precise defini-

tion of the field requires further study. In general, we

see a modest upward trajectory in investment activity,

although $13 million of the investment activity in 2013

was due to a single transaction.

1 This report counts Slow Money investments at approximately $31 million, even though Slow Money reports a total of more than $38 million through its network. The difference arises because: 1) the report stops at the end of 2013, and 2) a number of Slow Money investors were included in the survey, and their data therefore appears with the other survey respondents rather than with the aggregated Slow Money data.

STATE OF THE SECTOR REPORT 2014

6

INVESTMENTS BY INVESTOR TYPEThe survey covered a wide range of investor types. A

relatively small number of professional investment

funds and financial services organizations2 (RSF

Social Finance, Beartooth Capital, New Resource Bank,

Renewal Funds, Coastal Enterprises Inc., and Whole

Foods Market Local Producer Loan Program) account

for roughly half of the total investments. The remain-

der of the activity is broadly distributed between family

offices, foundations, Slow Money investors, and non–

Slow Money angels.

Note: All graphs in this report show data for the years

2009 through 2013.

2 Throughout the report the term “Investment Funds” covers both private investment funds and financial services organizations.

$0

$50M

$100M

$150M

INVESTMENT FUNDS$164,210,000

FOUNDATIONS$38,590,000

SLOW MONEYINVESTORS$31,150,000

NON–SLOW MONEY

ANGELS$10,290,000

SLOW MONEY INVESTMENT

CLUBS$360,000

FAMILYOFFICES

$48,330,000

INVESTMENTS BY INVESTOR TYPE

$0

$20M

$40M

$60M

$80M

2009 2010 2011 2012 2013

INVESTMENTS BY YEAR

SLOW MONEY INVESTORS

SURVEY RESPONDENTS


7

INVESTMENTS BY GEOGRAPHYRoughly one-quarter of survey respondents, repre-

senting about two-thirds of the total investing activity

covered by the survey, reported having no geographic

priority. The New England and Pacific regions have

received the most attention, from both the survey

respondents that reported a geographic preference and

Slow Money investors. Slow Money activity in New

England is driven in large part by Slow Money Maine,

the most active Slow Money local network.

SLOW MONEY INVESTORS

SURVEY RESPONDENTSwho reported a geographic preference

NO GEOGRAPHIC PREFERENCE$174.5M

GEOGRAPHIC PREFERENCE$118.5M

New England

Pacific

$7.5M $22.8M

$0.5M $2M

$11.5M $24M

$1.4M

(includes Alaska and Hawaii)

Midwest

Canada

South Central

Southeast

Mountain

$1.8M

$2M

$1.9M $20.8M

$1.9M $1.2M

$0.9M $18.4M

Mid-Atlantic

INVESTMENTS BY GEOGRAPHY


8

0

$30M

$60M

$90M

$120M

$150M

< $25K $25K–$99K > $5M$100K–$999K $1M–$5M

SURVEY RESPONDENTS DEAL COUNTSLOW MONEY INVESTORS

107 18482

185

4

0

53

227

122

4

ABOUT 60% OF THE TOTAL DOLLARS INVESTED WAS IN DEALS OF $1 MILLION OR MORE

ABOUT 60% OF THE DEALS WERE LESS THAN $100K

#

DEAL SIZE BY DOLLARS


9

DEAL SIZEAs the preceding chart shows, a majority of the invest-

ments tracked were under $100K. Although most of

these investments were made by Slow Money investors,

Slow Money investment clubs, and a few investment

funds that are focused on small-scale loans (Whole

Foods Market Local Producer Loan Program and The

Carrot Project), a majority of the survey respondents

have made some investments of $100K or less.

Roughly 60 percent of the dollars invested by survey

respondents were primarily in transactions of $1 mil-

lion or more. For Slow Money investors, the median

investment size was about $30,000 and over half of the

total funding deployed was in transactions of $100K to

$999K.

INVESTMENTS ALONG THE SUPPLY CHAINOf the funding that was classified by supply-chain

segment, farmland or ranchland and organic brands

each accounted for approximately 35 percent. Farming

or ranching operations, distribution, and processing

each received nearly 10 percent. A few large investors

drove this distribution: RSF Social Finance accounted

for about two-thirds of the funding directed to organic

FARMLAND ORRANCHLAND

ORGANICBRANDS

PROCESSING

OTHER*FARMING OR RANCHING OPERATIONS

DISTRIBUTION OR

AGGREGATION

36% 34%9% 8% 9% 4%

* Farm suppliers, retail markets, urban ag, restaurants or eateries, food service/catering, co-ops, and CSAs. There is some overlap in categories (e.g., some of the farming operations may also be CSAs).

SUPPLY CHAIN


10

brands, and Beartooth Capital accounted for about one-

third of the funding directed to farmland or ranch-

land. While survey data is lacking in granularity in this

regard, it is likely that the category “organic brands”

includes some brands that are local but not organic, but

is dominated by companies building national brands.

Of the investments made by Slow Money investment

clubs, about half were focused on farming or ranching

operations, 15 percent on processing, and over 10 per-

cent on urban agriculture. The largest area of invest-

ments for family offices, foundations, and non–Slow

Money angels was farmland or ranchland.

INVESTMENTS BY FOOD TYPEOf the funding that was classified by food type, pro-

duce accounted for nearly half and beef and other meat

for another quarter. Grains and dairy each account for

10 percent.

INVESTMENT STRUCTURESBy count, the vast majority of investments, roughly

70 percent, for both Slow Money investors and sur-

vey respondents, were made as loans. Of these, most

were under $100K. For both groups of investors, equity

investments accounted for about 20 percent and grants

PRODUCE

48%

OTHER*

7%

BEEF AND OTHER MEAT

25%

GRAINS

10%

DAIRY

10%

INVESTMENTS BY FOOD TYPE

*Specialty foods, nuts, beans and legumes, and multiple food types


11

or other (e.g., loan guarantees, PRIs, royalties, convert-

ible debt) accounted for about 10 percent. By dollars,

investments were roughly evenly split between loans

and equity.

HOLDING PERIODSMost of the funds invested by survey respondents and

Slow Money investors were seeking returns within one

to six years, primarily through loans. For those inves-

tors who primarily made equity investments, the time

horizons were longer, with many reporting having “no

specific holding period.” Slow Money investment clubs

are primarily making loans of three years or less.

RETURN EXPECTATIONSSlow Money investment tracking does not generally

include investment return expectations. However, Slow

Money investment clubs deploy their capital in uniform

ways that can be tracked. Most Slow Money investment

club loans bear interest rates of 1 to 5 percent.

0% 20% 40% 60% 80% 100%

120

INVESTMENT FUNDS

SLOW MONEY INVESTMENT CLUBS

FAMILY OFFICES

FOUNDATIONS

NON–SLOW MONEY ANGELS

0–3 YEARS

4–6 YEARS

7–10 YEARS

NO SPECIFIC

HOLDING PERIOD

29%

38%

15%

18%

HOLDING PERIOD


12

An interesting example is Colorado Food Invest-

ments, a Boulder-based Slow Money investment club,

which deploys its capital in three-year, 3-percent loans

with no collateral; approximately one-third of club

members hope that the portfolio will yield a 3-percent

return, another third expect to get return of capital, and

the final third are prepared for negative returns.

About half of the total invested capital of survey re-

spondents is seeing returns of 6 percent or more. Addi-

tionally, 25 percent of survey respondents indicated

that they “expect risk-adjusted returns appropriate for

the asset class.” It is likely that a significant portion of

respondents who indicated return expectations of greater

than 10 percent and, also, many of those expecting

0% 20% 40% 60% 80% 100%

INVESTMENT FUNDS

FAMILY OFFICES

NON–SLOW MONEY ANGELS

SLOW MONEY INVESTMENT CLUBS

FOUNDATIONS

WE MAKE GRANTS AND THEREFORE EXPECT A NEGATIVE 100% RETURN

WE MAKE INVESTMENTS FOR WHICH WE EXPECT A NEGATIVE FINANCIAL RETURN

WE EXPECT RETURN OF CAPITAL

1%–5%

6%–10%

GREATER THAN 10%

WE EXPECT RISK-ADJUSTED RETURN APPROPRIATE FOR THE ASSET CLASS OF THE INVESTMENT

2%

9%

5%6%

25%

17%36%

21% of total dollars invested might generally be considered “below market.”

RETURN EXPECTATIONS


13

6–10 percent, did not consider themselves to be making

below-market-rate investments. However, some foun-

dations, some angels, and a small sliver of funding from

investment funds are open to or have structured invest-

ments for negative returns or return of capital.

IMPACT OBJECTIVESOne-third of survey respondents, representing about

15 percent of invested capital, are investing primarily

for social and/or environmental impact. Approximately

60 percent of survey respondents, representing 85 per-

cent of invested capital, indicated that they were seek-

ing a balance of financial returns and social and/or

environmental impact.

In terms of specific impact objectives, 60 percent of

survey respondents prioritized social and economic im-

pacts, including local food production, job creation, ru-

ral economic vitality, and increasing access to healthy

foods for all Americans. A quarter of survey respon-

dents prioritized environmental impacts, including soil

fertility, biodiversity, carbon sequestration, and reduc-

ing toxicity and pollution.

Half of survey respondents reported having met-

rics for tracking social and/or environmental impact.

Several of these respondents indicated willingness to

share their metrics.

EDUCATION

WATER QUALITY

WATER RETENTION

FLOOD CONTROL

NATIVE AND INDIGENOUS AGRICULTURE

SEED DIVERSITY

WORKERHEALTH

REDUCING FOSSIL FUEL USE

GENERATIONAL RESPONSIBILITY

PEACE


14

CONCLUSIONAnalysis of the data from the Slow Money investment

database and from 42 survey respondents, covering

$293 million and 968 deals from 2009 through 2013,

indicates that:

pp About 60 percent of the total deals were less than

$100K.

pp About 60 percent of the total dollars invested were

in deals of over $1 million.

pp Seventy percent of total investments went to land or

organic brands.

pp Most money invested through the Slow Money net-

works and investment clubs targets farming and

ranching operations, processing, distribution, retail-

ing, and other categories.

pp The super-majority of investments are loans.

pp Twenty-one percent of total invested dollars expected

below-market returns.

pp Sixty percent of survey respondents prioritized

social and economic impacts, and a quarter of sur-

vey respondents prioritized environmental impacts.

pp Half of survey respondents reported having metrics

for tracking social and environmental impacts.

For a number of reasons, this survey was not in a po-

sition to determine “total portfolio returns” on surveyed

investments. In terms of the Slow Money network, it is

still too early in the process of getting capital flowing

to do such analysis. Because they have discrete portfo-

lios and formal tracking, Slow Money investment clubs

may be effective vehicles for analyzing risk and returns

of broader Slow Money cohorts. Return data from pri-

vate investment funds may or may not be made avail-

able to future studies.

That said, data on deal size and return expectations

was suggestive. Investment funds and family offices,

which together accounted for 73 percent of the dollars

invested, tend to look for rates of return that are not

explicitly subsidized. Foundations, Slow Money inves-

tors, and non–Slow Money angels cross the line explic-

itly between philanthropy and market-rate investing.

In terms of deal size, while a small number of organi-

zations (e.g., Whole Foods Local Producer Loan Fund

and The Carrot Project) and Slow Money investors are

particularly active in the under $100,000 category, a

majority of survey respondents have made some invest-

ments of that size.

As capital continues to flow into local, sustainable,

and organic food and agricultural enterprises, further

inquiry into the relationship between this sector and

the broader field of impact investing holds consider-

able promise.

This survey was conducted on a short timeframe with a

limited budget. We recognize that we were not able to be

comprehensive in our outreach and that there may be some

selection bias in our findings. Therefore, the level of preci-

sion is imperfect, and findings must be understood to pro-

vide rough characteristics and rough distributions across


15

categories. The data is lumpy, and in some cases responses

from a single entity drive category results. We have pointed

out these instances where possible. Extrapolating from this

data a more complete description of the sector, including

more precise definitions of subsectors, is a subject for con-

tinuing study.

Beartooth Capital Partners

Castanea Foundation

Coastal Enterprises, Inc.

Cienega Capital

Colorado Food Investments

Fair Food Fund

FarmWorks Investment Co-operative Limited

Gateway HarVest, LLC

Incredible Edibles Investment Club

Investeco Capital

Investors’ Circle

Iroquois Valley Farms, LLC

J.W. McConnell Family Foundation

Level 3 Capital Advisors, LLC

Local Economies Project, New World Foundation

Local Food Shift

Local Investments Fund

Local Loans for Local Foods

Localization Partners

New Resource Bank

New Spirit Farmland Partnerships

No Small Potatoes Investment Club

Renewal Funds

RSF Social Finance

Slow Food St. Louis

Solidago Foundation/Frances Fund

Sonen Capital

Sprout Lenders, LLC

Sustainable Agriculture & Food Systems Funders

Sustainable America

Sustainable Local Food Investment Group (SLoFIG)

The Carrot Project

Thread Fund

Vatheuer Family Foundation

VSJF Flexible Capital Fund, L3C

Wallace Center at Winrock International

Whole Foods Market Local Producer Loan Program

Wholesome Wave

Four anonymous respondents

RESPONDENTS

Acknowledgments: The author thanks all of the survey respondents for being so generous with their time. This re-

port would not have been possible without their participation. Thanks also to Woody Tasch for his help aggregating

and analyzing this data.

Amy Dickie is a founding member of Slow Money and the author of Local Foods: A Guide for Investors & Philanthropists.

She helps run the philanthropic services group at California Environmental Associates, where she focuses on sustainable food

and agriculture. Feel free to contact her with questions about this report: [email protected].

17

STORIES FROM FOOD

ENTREPRENEURS

BLACK EARTH MEATSBartlett Durand

In recent years, there has been a local meat renaissance going on in Wisconsin. Black

Earth Meats has been a very active participant in this emerging sector. Our operation

included a retail space, a buyers club, and a community-supported agriculture (CSA) sub-

scription service, as well as a U.S. Department of Agriculture–inspected slaughterhouse.

Black Earth Meats served as an important support for nearly 200 farmers, most of

whom raised animals in small numbers on pasture, free of antibiotics and hormones.

After moving into a local slaughterhouse in the 1,500-person town of Black Earth seven

years ago, the company grew considerably. The plant grew from 70 beef a week to 140–

150 a week.

In addition to operating the only certified-organic and Animal Welfare Approved

slaughter facility in the area, Black Earth Meats also prepared and sold the same meat at

its retail space, and served as a middleman between farmers and the restaurant and re-

tail industry. We aggregated from a number of small, sustainable farmers and tried to

keep prices as unadorned as possible, developing relationships with our chefs and gro-

cers to learn together how to use more of each animal.

This approach worked. Customers drove to Black Earth to pick up meat from local

farmers, and many area farmers invested in growing their operations once they were

confident they had a processor they trusted.

STORIES | ENTREPRENEURS

18

Then, in August of this year, Black Earth Meats announced it had to close its doors. The Village of Black Earth—prompted by a small group of neighbors—had ordered the

company to relocate. Whereas the company we had replaced had been slaughtering an-

imals one day a week, Black Earth had 40 full-time employees and processed animals

every day.

“The problems started about three and a half years ago,” neighbor Mary Mickelson

told local Wisconsin newspaper Isthmus, describing the noise, trucks, and smells that ac-

companied Black Earth’s growing business.

In response to such complaints, the town required Black Earth Meats to cease oper-

ations. The company is now involved in litigation regarding this closure. Meanwhile,

many of the farmers who worked with Black Earth Meats are caught between disbelief

and frustration.

A FARMER’S PERSPECTIVE The experience of Vince A. Pope of Double Ewe Farm in Arena, Wisconsin, is illustra-

tive. He and his wife have day jobs and raise sheep in their free time on the farm his

grandfather bought in the 1920s. They sell around 60 lambs a year, and while the profit

margin is small, they’re animal lovers who prioritize the humane aspect of their work.

“I’m proud to say I’ve never sold an animal through a livestock auction,” says Pope. “You

don’t know where they go or how they’re handled.”

Double Ewe Farm is Animal Welfare Approved, and that means they must follow a

strict set of standards from the animals’ birth up until the moment they are harvested.

Black Earth Meats made that last part possible. For one, the animals were transported

just 12 miles to the slaughterhouse, which greatly reduced their stress.

“To be honest, market day isn’t my favorite day of the year,” says Pope. “But that’s

these animals’ purpose in life. They’re giving us life, and they had a good life,” he says.

“American lamb is getting outpaced by imports, and if we continue to lose processing

infrastructure, we’re going to lose our industry,” he says. “That might sound far-fetched,

but go back and tell the textile industry that in the late ’90s.”

Keeping food production out of sight may have been effective in recent decades, when

big-box stores were rising to power and most eaters didn’t care about where their food


19

came from. But making the process visible–even the parts we may not want to see—can

help eaters get in touch with the true value of their food.

Nicolette Hahn Niman, who co-owns California’s BN Ranch with her husband Bill

Niman and is the author of Righteous Porkchop (William Morrow, 2010) and the forth-

coming Defending Beef (Chelsea Green, 2014), sees the closure of Black Earth Meats as

part of a larger problem. “It’s a good example of the phenomenon where people want lo-

cal food and they want local farms, but they don’t want local slaughterhouses and meat

processing,” she says. “But we have to have the full food chain restored if we’re going

to have a sustainable system. Somehow we have to come to grips with this as a society.”

Shortly after a recall and the closure of the Rancho slaughterhouse in Northern

California left many farmers in the area in financial straits, Niman wrote a New York

Times op-ed calling for more local food advocates to Support Your Local Slaughterhouse.

In it she wrote, “From 1979 to 2009, California went from having 70 slaughterhouses

to 23. Because it is more complicated and costly to do so, nearly all large facilities refuse

to work with smaller farms. This makes slaughtering the most serious bottleneck in the

sustainable food chain.”

Back in Wisconsin, farmers and consumers are waiting to see what comes next for

sustainable meat processing in the greater Madison area.

CALIFORNIA SAFE SOILDan Morash

If you’re like me, you may have wondered what happens to all that food the supermar-

kets can’t sell. Things like day-old bread can be donated to those in need, but too much

food isn’t consumed before it reaches its “sell-by” date.

At California Safe Soil, we’re commercializing a new technology to recycle food from

supermarkets into fertilizer for farms, in only three hours. The key is to recycle the food

quickly, while it’s still fresh, and then use heat, mechanical action, and enzymes to re-

duce food to its constituent nutrients: amino acids, fatty acids, simple sugars, and min-

erals. Run those nutrients through the farmer’s drip lines into the root zone, and they


20

stimulate rapid and diverse growth of soil organisms. Plants react to this expansion of

organic activity by increasing root growth, flowering, and fruiting. More roots means

more plant uptake of water and fertilizer, and greater plant vigor. Healthy soil grows

healthy crops.

For the past two years, we’ve been running a pilot plant in West Sacramento,

California, to demonstrate this new technology. We have five supermarket customers,

and one of them—Save Mart Supermarkets—has agreed to supply us with organics re-

cycling from all 225 of their stores. This will mean construction of two new commercial-

scale plants, one each near their Distribution Centers in Roseville and Merced. We recy-

cle 100 percent of our feedstock—no effluent, no emissions, no nuisance odors. Since

food is mostly water, our fertilizer, called “Harvest to Harvest,” or H2H for short, is a liq-

uid, equal to 90 percent of our feedstock. The remaining 10 percent solids are screened

out and make an excellent sustainable pig or chicken feed. Each commercial plant we

build will recycle over 32,000 tons per year of organics, will cut greenhouse gas emis-

sions by over 42,000 metric tons of CO2 equivalents, and will serve 120,000 acres of

sustainable agriculture. The technology is modular, as we plan to build a network of

plants near the distribution centers of our supermarket customers. That will minimize

both collection and distribution costs, and minimize our environmental footprint.

Getting to this point hasn’t been easy. We started with the usual “friends and fam-

ily” equity financing rounds, and then went to angel capital programs, like Venture

Greenhouse, Investors’ Circle, SXSW, Keiretsu Forum, and Imagine H2O. Going for-

ward, we will have corporate and public sector partners. Many of California’s large farms

have active sustainability programs. We have been working with independent agro-

nomic experts from UC Davis, Cal Poly, Fresno State, and the UC Cooperative Extension

offices, and private researchers to conduct scientific research in support of technology

adoption. Farms have been happy to run field trials, and we now sell all the H2H we

can produce at our pilot plant to almond, strawberry, tomato, vegetable, and wine grape

growers.


21

CAPAY VALLEY FARM SHOPThomas Nelson

Capay Valley Farm Shop (CVFS) was established in 2007 to connect Capay Valley farm-

ers as closely as possible with regional customers. In the ensuing years, we have sup-

plied 100 percent local food from our farms and ranches to scores of businesses and

thousands of consumers in Northern California.

The company was founded by farm community members, who believe in cooperative

marketing as a means to strengthen agriculture and, thereby, keep fertile lands working.

We see wholesome foods grown with sustainable practices as a key part of the solution

to nurturing the health of humans, local economies, and the environment.

As a rural food hub we meet critical needs in our regional food system by connect-

ing our network of 45 farms and ranches to markets in Northern California and increas-

ing consumer access to high-quality produce, meats, olive oils, and other value-added

products. We pick up products directly from our producers, and then aggregate, pack,

market, and deliver directly to customers. Our multifarm Community Supported

Agriculture (CSA) program offers flexible and minimal requirements to easily incorpo-

rate new farmers and help them scale up to wholesale.

Farm Shop also focuses on supporting small- to mid-size growers’ capacity to en-

sure fair compensation and to navigate complex government regulations. It is definitely

a challenge to do both! We position our producers to be price-makers and, based on

grower request, we will engage in crop planning specific for the sales channels we have

developed. Food safety and an increasingly complex regulatory environment pose chal-

lenges to our growers, and Farm Shop helps them navigate this journey.

Since we opened, CVFS has returned $1.5m to growers. We have created 10 full- and

part-time jobs (about 8 FTE). As noted above, we work with 45 farms and ranches—that

number has grown every year we have operated.

We continue to see an opportunity for our rural food hub to help our farms connect

with markets they would otherwise be unable to reach. We are encouraged by a growing

base of beginning farmers in Capay Valley. Equally important is growing consumer in-

terest to support transparent, equitable, sustainable, and regional food systems.


22

CATTLE PRODUCERS OF WASHINGTONSue Lani Madsen

A year after the ribbon cutting is a good time to reflect. The Cattle Producers of

Washington Livestock Processors Cooperative Association (CPoW LPCA) in Odessa,

Washington, opened its doors in September 2013. We’ve been fully operational since

February 2014, after a rough shakedown and major repairs, and we’re hoping to reach

cash flow sustainability before the start of 2015. We are in the vanguard of the movement

to rebuild small-scale USDA processing capacity lost over the last 30 years.

We face many challenges: finding the right combination of equipment, finding

skilled and willing-to-learn unskilled labor, competing with extraordinarily high cattle

prices from the major packing houses, helping our members connect to marketing.

Then there are the challenges totally outside of our control, like the impact of major fires

in Washington on cattle numbers, winter ranges, and ranchers.

But we also have to celebrate our successes. We’ve made it through our first year.

We have a good management team in place and are developing our workforce. Our pro-

ductivity is increasing. We have a permanent USDA inspector assigned after months of

interims, and he’s moved into the community. Our food safety record is spotless. Our

customers (the ranchers) are starting to connect with new customers (consumers) and

build their markets. Chefs, school districts, universities, and families now see the value in

locally produced and processed meat—something that wasn’t even an option a year ago.

The CPoW LPCA has benefited greatly from the connections we made through the

Slow Food and Slow Money movements. We wouldn’t be here without the support of

people who understand the importance of rebuilding regional food systems for our long-

term sustainability. Fortunately, ranchers are stubborn types and don’t give up easily.

We’re working hard to ensure long-term success.


23

CHATHAM MARKETPLACECarol Peppe Hewitt

At our first Slow Money North Carolina gathering, in July 2010, Paul Finkel suggested

that we refinance the $300K balloon payment of Chatham Marketplace, our local co-op

grocery store. The Marketplace was about three years old, and Paul, who served on

the co-op’s finance committee, knew well the burden of this debt. Could Slow Money

NC help?

At the time, the idea sounded preposterous. A few of us had made Slow Money loans

of $2,000 and $3,000—to a baker, a restaurant, and a cheese shop. But $300,000? It

didn’t seem possible.

Over the next year, we staged many more conversations among like-minded people

about Slow Money and community finance. The networking alone made the gatherings

worthwhile. People found the Slow Money idea contagious, and soon folks who wanted

to make affordable loans began finding us. We met farmers and local food businesses

that needed capital for small projects, we brought people together, they formed relation-

ships, and affordable Slow Money loans were often the result.

In the fall of 2011, with another dozen Slow Money loans under our belt, we revisited

the Chatham Marketplace impending balloon payment. While no one individual was

interested in making a $300,000 loan, we wondered if we could find a way to handle

this as a group. Could we create a legal entity to gather the funds, and make the loan?

We could, and we did.

A little more than a year after that first Slow Money NC gathering, we jumped ahead

of the balloon date and refinanced the entire balance due at the time.

We raised $400,000 (16 participants contributing $25,000 each) and formed a

Limited Liability Corporation. We called ourselves “Bringing It Home Chatham, LLC,”

because that was exactly what we did with our money.

On November 1, 2011, the closing date for the refinance, Bringing It Home Chatham,

LLC, took a historic step forward in financing ourselves as a community. We dropped

the co-op’s interest rate several points and reduced its monthly payments by a third!


24

Now in its eighth year, the Chatham Marketplace is showing a small, but growing

profit. In 2013, sales were over $2.3 million. There are now over 2,400 members and the

store is a vibrant and much-loved part of the community.

Excerpted with revisions by the author, Carol Peppe Hewitt, from “Financing Our Foodshed:

Growing Local Food with Slow Money (New Society, 2013)

DE LA CHIVA DAIRYTim Doty & Matt Doty

De La Chiva Dairy, LLC, is a family-owned and -operated goat dairy in Northglenn,

Colorado. We started raising pygmy goats in 1993 as a 4-H project. In 1995 we branched

into dairy goats. We started with two of them.

I have Crohn’s disease and soon discovered I felt much better on goat’s milk. In 1998

my oldest son, Timothy, went to the Czech Republic as a foreign exchange student.

He was exposed to some wonderful cheese and developed the desire to learn to make

cheese. After he returned, goat cheese became our passion. In 2008 we moved our dairy

herd to an old cow dairy in Northglenn. In 2010 we became licensed to produce goat

cheese. We had approximately 60 to 70 goats to milk. We began to sell our goat cheese at

local farmers’ markets. We have grown to over 200 goats. We have delivered over 4,000

baby goat kids since 1993. We are milking approximately 120 goats twice a day. My sons

Timothy and Matthew are aggressive in selecting sound genetics in our male goats, so

we have increased our butterfat content and quality of milk. This allows us a larger yield

of creamy, smooth, outstanding cheese.

We have a specific grain mix, made for our goat herd from a local grain elevator. This

grain mix has enhanced the taste of the milk as well as the yield of cheese, and also, pro-

vides the necessary minerals, probiotics, and protein for the goats’ overall health.

Another challenge is the cost factor in this area. There is a prison in Cañon City that

has a goat dairy, and they produce milk and sell it very cheap to the other local goat dair-

ies. Therefore our expenses are higher, because we are paying for hay, grain, and other

general goat care, plus the expense and time of raising our own goats. The benefits are

that we know exactly what is fed to the goats and what medications they are given. Plus,


25

we can ensure that no hormones are introduced to our goats. The dairies that purchase

the cheaper milk from Colorado Department of Corrections are able to sell their cheese at

lower prices than we can. Therefore, our cheese has to be so much better.

Another challenge is selecting and finding the correct farmers’ markets to enter.

Some markets are not run as well as others, and some demographics are by far better

than other markets. We have learned in the past few years which markets are best for

our products.

Our cheese is outstanding. We have a couple of cheeses that are unique to us, and

no one around can match them. We are growing and getting more name recognition

and have a strong following. We are branching into selling to restaurants and directly to

chefs and other shops.

The money from the Slow Money investment club in Boulder allowed us to bridge

over last winter. Most goat cheese that is purchased in chain stores is frozen, then

shipped, and then thawed. We prefer to do fresh, local cheese.

GREENLINGMason Arnold

The Greenling story began with a fiery passion for the environment and sustainability.

Recognizing that agriculture consumes vast quantities of water and energy, I knew if we

could change the food system many other things would get better too. I studied the food

system and thought there was a better way to get local, sustainably produced food from

the farm to the table. Greenling set out to create a system where technology meets dirt

to help farmers spread their good food and help people connect with farmers and food.

Shortening the distribution lines between small producers and local consumers is

a key link in the local food systems that Slow Money is working to support. It was very

gratifying to be featured at Slow Money’s 2nd National Gathering in 2010, and even more

gratifying to receive investment capital as a result.

Four years later, Greenling has delivered local and organic food to over 100,000 peo-

ple across Texas. This kind of delivery business has been tried and has failed many

times, because matching small-farm supply with the demand of individual consumers


26

is extremely difficult. That’s where Greenling’s innovative inventory management sys-

tem and strong farmer relationships have come in and helped us stay at the forefront of

the food delivery industry. We’ve developed strong farmer relationships by giving them

a better price than they can get wholesale and giving them a reliable, year-round place

to sell their products.

Because Greenling works directly with the farm and with the end consumer, cutting

out the many middle-men that are typically in the supply chain, we can still charge prices

comparable to the grocery store. It’s only with the support of communities and organiza-

tions like Slow Money that we’ve been able to thrive. Along the way, Greenling has also

added innovative products, from 100-percent organic cold-pressed juices to organic and

local meal kits and much more.

HARVEST RESTAURANTIvor Chodkowski

In 2007, with help from the USDA and the Kentucky Agricultural Development Board,

I helped found Grasshoppers Distribution, a local food aggregator and distributor which

served Louisville, Kentucky, until December of 2013, when the board decided, for com-

plex reasons, that it should close. It was, nevertheless, an important effort in the region,

and many of its lessons are still a significant part of the local food and agriculture dis-

cussion. It is important also to mention that Grasshoppers was a nationally recognized

food-hub, as these efforts have come to be called, and was selected in a national compe-

tition by Wholesome Wave to receive a loan to encourage a three-fold bottom line: envi-

ronmental, social, and economic. Wholesome Wave made a point of saying that, even at

the time, all of the candidates for the loan were challenged in many, if not all, aspects of

their business models.

I also helped open a local-foods restaurant in Louisville, with the goal of sourcing

80 percent of its product from within 100 miles. That award-winning restaurant is called

Harvest. Inspired in part by Slow Money national leadership, it is always a cause for cele-

bration to say, “The restaurant raised between a quarter and a third of the capital that we


27

needed to open with a chalkboard at the farmers’ market. There are 20 or so small inves-

tors in the community, some of whom are farmers.” Since opening, Harvest restaurant

has been giving back to the community by sourcing ingredients from more than 50 local

farms. We have spent more than $1 million on locally produced dairy products and pro-

duce, and locally raised livestock.

When my own farm, Field Day Family Farm, working with the new Slow Money

Kentucky network, was able to secure two small loans for the financing of winter pro-

duction, it was as if much of what we had hoped for at Grasshoppers had begun to come

true. These two loans will help my farm finish work on two greenhouses and offer op-

erating capital at a time of year when the farm’s cash reserves are in short supply. The

loans will distribute the risk of winter throughout the year. It has been a welcome effort,

not just on our farm, but also for our CSA customers who, just this year, have their first

opportunity for a winter CSA. It has been worth the wait!

HEEKS FARMDavid Heeks

Heeks Farm is located on 75 acres in Bahama, North Carolina. The farm specializes in

cool-season vegetables sold primarily through local farmers’ markets during the months

of September—April. Heeks Farm was started in 2009 on a quarter of an acre at an

incubator farm run by the Orange County Cooperative Extension. After leasing land for

five years, the farm moved to its current location this summer.

In 2011 Heeks Farm received its first Slow Money loan to purchase a tractor-mounted

Jang precision seeder that enabled us to double our production area. This piece of equip-

ment has been instrumental in our expansion, allowing us to seed long rows in very

straight lines in just a few minutes. This year we added a tractor-mounted basket weeder

to mechanically cultivate a significant portion of our cropland to allow us to expand our

production area without a proportional increase in our labor costs. We strive to be an

efficient farm, and this year we hope to increase sales to $71,000 while only slightly in-

creasing our production acreage to four.


28

See the table below with our sales figures since our inception in 2009.

This summer we received our second Slow Money loan to help us finance construction

of an operations center at the new farm. This includes a barn with a vegetable wash-

ing station, two walk-in coolers, and a tool room. This project has cost a little more and

taken a little longer to complete than expected, but it is an exciting stage for the farm.

The future looks bright.

LOCKHART FAMILY FARMJosiah Lockhart

Having developed a passion for agriculture and helping to feed people while living

abroad in Scotland, my wife and I moved to Virginia to rehabilitate a derelict farm

recently purchased by my parents, a stone’s throw from the farm they had while I was

a child. With a passion for biodiversity, I’ve developed the farm to focus exclusively on

preserving rare and heritage-breed woodland livestock and tried to enact the belief that

to save these breeds we have to eat them.

In addition to raising livestock, work in the community was always part of the mis-

sion, and the farm offers a range of on- and off-farm educational activities. Time and

resources have always been set aside to ensure access for individuals who don’t nor-

mally have access to high-quality food and agriculture. The farm participates in Shalom

Farms’ nutrition program, through which food is donated to low-income families with

YEAR GROSS SALES ACRES IN PRODUCTION

2009–2010 $9,773 .25

2010–2011 $19,977 .5

2011–2012 $34,820 1.25

2012–2013 $48,744 3

2013–2014 $54,171 3.5


29

nutritional deficiencies. In addition, a special on-farm summer camp is arranged every

year for children from the Fredericksburg refugee center at no cost to them, and a train-

ing program for adults facing long-term unemployment or in transition from the mili-

tary is in the planning stages.

Lack of capital has always been the largest stumbling block for the farm. Securing

start-up capital for a niche-market farming enterprise is challenging, and after strug-

gling for some time, half of the projected need was secured through a combination of

personal investment, private financing, and a short-term loan from Equity Trust.

At the start of 2014, I was invited to join the board of directors for both Slow Food

RVA and the Richmond Food Co-op. In these roles the farm has the opportunity to work

directly with the key players in the local supply chain, helping to increase the market

share for rare and heritage meat as well as promoting access to good, clean, natural food

in food deserts across the area.

By summer 2014 the farm’s outlook was so positive that we were able to secure an ad-

ditional $125,000 in traditional bank financing to expand our rare-breed operation and

educational activities. By the start of 2015, the farm will be one of the largest breeders of

the American Mulefoot (the rarest commercially available pig in the United States) and

has been given the opportunity to further develop the Buckeye heritage meat chicken

strain that has been under preservation by The Livestock Conservancy.

LUCKY PENNY FARMAbbe Turner

The journey began in 2008, when I earned second place nationally in the American

Dairy Goat Association’s Amateur Confection Contest with my cajeta recipe, a Mexican

caramel sauce reminiscent of dulce de leche. I handcrafted this candy from fresh goat

milk sourced from our family’s dairy goats at Lucky Penny Farm in Garrettsville, Ohio.

Also that year, I was selected to represent the Cleveland Slow Food Convivium in Turin,

Italy, as a Slow Food Terra Madre Delegate. What an honor!

But timing is everything. Unfortunately, 2008 was also the year the market crashed,

and I could not obtain a penny of traditional loan-based funding.


30

Persistence, flexibility, and Slow Money eventually paid off. In 2010, Slow Money in-

vestors helped me establish Lucky Penny Creamery in Kent, Ohio, which specializes in

fresh goat, sheep, and cow cheeses and confections. By 2012—thanks to a Slow Money

grant from the Columbus network—we launched Lucky Penny Cajeta at the Fancy Food

Show.

We produce superior local dairy products by managing the entire process, from pas-

ture to plate, according to sustainable farm and food production practices. Lucky Penny’s

wholesome approach to local specialty food has earned the brand a solid following from

reputable chefs, farmers’ markets, distributors, and customers throughout the Midwest.

Lucky Penny is entirely funded by 38 individuals who care about food and how it’s

produced. People invest in Lucky Penny because they believe in our products, and we

have paid it forward by working with more than a dozen farmers and by assisting the

launches of new companies (e.g., Clover Road Cream Cheese, made with milk from

grass-fed cows). Lucky Penny is built on the belief that our value-added agricultural

products contribute to the health and happiness of our customers and the sustainability

of our local food system.

Our efforts have been recognized. I was named a 2013 Farmer Hero by Farm Aid,

and a Superstar Farmer by Local Food Cleveland. Lucky Penny Creamery earned the

Green Business Award from Portage Parks Foundation earlier this year. O magazine

even called, interested in featuring Lucky Penny as one of Oprah’s favorite brands!

I am gratified to have earned the Kent Area Chamber of Commerce’s IMMY Award,

which recognizes quality local businesses that support economic retention, reinvest-

ment, and new facilities development. We chose to house Lucky Penny Creamery in a

run-down building in a declining part of Kent so we could participate in the city’s eco-

nomic development as an urban farm processing operation. I want to demonstrate how

to transform a defunct union lodge into a thriving business, while inspiring others to

believe in their dreams enough to move forward with them.

Lucky Penny Creamery is a link between farm and city, transforming a raw agri-

cultural product into a premier chef’s cheese. A healthy food system draws from local

small farms that provide fresh, nutritionally superior food products to the consumer, not

the over-processed, nutritionally depleted foods that are mass-produced and transported

cross-country to big-box stores for maximum profit. Lucky Penny connects family farms


31

to family tables, proving that a small entity can make a big difference with the support

of Slow Money.

We believe the how of production matters—making cheese according to artisanal tra-

ditions, in small batches, by hand, with integrity, for the freshest possible food product.

Lucky Penny cheeses are served in local restaurants within 72 hours of milking time on

the farm. Our animals graze outside daily. We believe you can taste the sunshine in our

cheese.

We produced over 10,000 pounds of cheese last year. As we approach our fifth year

of business—without one dime of bank loans to date—our challenge is securing capital

infrastructure investment so we can scale up production to meet new account inquiries

from Whole Foods and Kroger.

We have learned that good things come to those who wait, like lucky pennies adding

up in a jar. Slow Food and Slow Money have reinforced our faith that we can strengthen

our economy from the ground up ... starting with food.

MAINE GRAINSAmber Lambke

Much has changed in Skowhegan, Maine, over the last decade. Once a declining mill

town, it has become a hub for local, sustainable, and organic farming and food enter-

prises. This remarkable transformation started with a shared vision to bring Maine’s

grain economy back. A mix of public and private investment enabled that vision to

become a reality.

In 2001, I moved to Skowhegan with my husband, a partner with Skowhegan Family

Medicine. Like many residents, we loved Skowhegan but were concerned about the lack

of economic opportunity. Together with a circle of friends equally passionate about the

town’s future, we took action.

A clear asset in Skowhegan was its farmland and hardworking people. In its agricul-

tural heyday, Skowhegan produced enough wheat to feed 100,000 people. With the “buy

local” ethic picking up steam, organizers decided that producing good food was the key

to the revitalization of their town.


32

In 2007, I co-founded the first Kneading Conference, now an annual event that draws

attendees from throughout the country and Canada. Inspired by the conference’s initial

success, my colleagues and I established the Maine Grain Alliance, a nonprofit organi-

zation that preserves grain traditions from earth to hearth through a year-round slate of

educational programs.

To establish the town as a leader in the statewide grain economy once again, artisan

baker Michael Scholz and I purchased Skowhegan’s old county jail in 2009 for $65,000

and began transforming it into a gristmill. Despite early hurdles and skepticisms, the

town rallied around the project, with the county economic development corporation, a

local bank, Slow Money Maine, and others helping to finance the refurbishment.

The Somerset Grist Mill launched milling operations in 2012. Using the traditional

stone milling process, it buys natural and certified-organic grains from area farmers to

process and sell under the Maine Grains label. Maine Grains is sold in natural food stores

throughout the Northeast, and the products have been used by award-winning restaurants

and bakeries including Standard Baking Co. of Portland, Maine, and Gramercy Tavern

of New York City. This spring, Whole Foods began using Maine Grains’ flour in a honey-

wheat baguette it carries in its Northeast stores.

The former jail has become the heart of Skowhegan’s local food and entrepreneur-

ial culture.

In addition to housing the gristmill, it is home to the Skowhegan Farmers’ Market,

the Pickup Café and community supported agriculture (CSA) program, the Maine Grain

Alliance, a youth-run technology center, and a yarn shop. To date, Maine Grains has

raised more than $1.4 million in capital to support its growth, including $630,000 in

grants, a $311,000 commercial loan, $125,000 in owner equity, and $367,000 in patient

loans from Slow Money–inspired investors who defer principal and interest for the first

five years, charge a low interest of 3–5 percent, and believe in strengthening the food

system.


33

MM LOCALBen Mustin

MM Local Foods began when co-founder Jim Mills and I decided there ought to be a

better way to make great, authentic local food available year-round. Starting in 2009,

we began to work with local, organic family farmers in Colorado to preserve surplus

ripe produce—preventing great fruits and vegetables from going to waste while preserv-

ing their delicious flavor to enjoy year-round. MM Local continues to focus on building

strong partnerships with local farmers to make delicious, locally produced products,

including jarred fruits and vegetables, pickles, and live ferments.

At the start, the MM Local endeavor was met with skepticism. In 2009, when we first

began to search out local growers with whom to work, farmers were skeptical about what

we wanted to do. It was difficult to find people who would sell us produce at the volumes

we hoped to buy. In retrospect, their skepticism was more than merited. As we’ve since

learned, there is a lot of talk in local agriculture, but follow-through and great execution

are what ends up making the difference. We heard from a lot of people that the business

and production model we were pursuing was too complex—too linked to the variable and

risky realities of locally grown food, and that our market would be small.

In hindsight, we’ve been lucky to be a part of a food movement that has sustained our

ongoing growth and that seems to keep growing faster than we do. We have experienced

challenges expanding distribution, growing our production capacity, and securing the

working capital to run a business that invests heavily in seasonal production. We have

never experienced a lack of interest in our products, our brand, or our mission from the

communities and retailers with whom we work.

After three years working in commissary kitchens around Denver, we finally moved

into our own cannery in downtown Denver with the help of a small Series A financing

in 2012. In 2013 we ran our first pilot program in the Pacific Northwest, working with

local growers and retailers to make and sell produce in a new part of the country. Every

jar we put up is still traceable back to the farm where it was grown, and our mission re-

mains very similar to when we first sat down with the idea to start the business. We are

building an authentic national model for local food, and because it is what communi-

ties around the country want, it seems to be working. It’s a gift we appreciate every day.


34

MAXFIELD’S John Paul Maxfield

It’s ironic. Agriculture marked humanity’s separation from nature, aided and abetted by

the alluring promise of technology, setting the course for our present trajectory. But just

as agriculture and technology have separated us from nature, we believe that they can

help to reconnect us. The seeds of change are firmly planted, and shifting winds bring

with them the promise of a new season. As we move forward, let the legacy of agribusi-

ness be a cautionary reminder to future generations that the appropriate place for agri-

culture rests not in the industrial system where it can be controlled by a specialized few,

but rather one participated in by and for the people.

Sustainable agricultural systems, by definition, are those that work with nature.

Nature’s wisdom is the interconnection to all things, and diversity is its strength.

Diversity requires small-scale attention, which can’t be properly fostered in the cen-

tralized agro-industrial models. An ecological approach to agriculture favors the small

stakeholder and has the power to decentralize the food system once again.

So at last, there is hope. Our efforts to repair the broken food system start in our own

backyard. We need to provide each individual with everything they need to participate in

their own food production at home. Food production can be personal, use small areas,

and produce complete diets like it has for so much of our past. Armed with a new set

of technological tools, like those provided through social media, it has the power to con-

nect neighbors so people can help one another build gardens, trade produce, learn per-

son to person, and tell stories. If we begin with the individual, the paradigm shift will

naturally flow to families, neighborhoods, communities, and ultimately into the broader

culture.

That is the genesis of our Maxfield’s line of products. Everything we make is designed

with intention to empower the farmer in each of us with tools to nurture our gardens

and the earth, sustain ourselves, and share our bounty with our communities.

We currently manufacture and sell premium organic soil products out of our

“Microbe Brewery” located in the shadow of Colorado’s majestic Front Range. Under

our brand, Maxfield’s, we distribute our current soil products to the local farming and

gardening market, primarily through nursery and garden stores, hardware stores, nat-

ural grocers, and hydroponic equipment retailers. Under our Batch:64 brand name, we


35

distribute primarily to indoor hydroponic retailers. We believe our greatest opportuni-

ties will be found at the intersection of the organic foods, personal health, and natural

lifestyle markets.

RE:VISIONEric Kornacki

At Slow Money’s fourth national gathering, in 2014, Re:Vision won the 2014 Mamma

Chia Entrepreneur of the Year award for our project to develop the Westwood Food

Cooperative, one of the first food cooperatives in the country owned and operated by

a low-income community. Shortly after Slow Money’s recognition, Re:Vision won

a $300,000 award from the USDA Competitive Community Food Projects, placing

fourth out of over 120 proposals nationwide. With momentum from of these awards,

we attracted the interest of numerous organizations and foundations, helping lay the

groundwork for a multi-stakeholder food cooperative.

Re:Vision closed 2013 having helped over 200 low-income families of southwest

Denver develop their own backyard gardens, working with Somali Bantu refugees to

sustain a 1-acre community farm, growing over 45,000 pounds of organic produce in

one of Denver’s most severe food deserts.

In April 2014, the community elected its first board of directors for the Westwood

Food Cooperative and established membership agreements for a multi-stakeholder

cooperative of producers, consumers, and workers. We are working with the City of

Denver’s Office of Economic Development to acquire commercial property in Westwood

as the future site of the Cooperative. Leveraging the Slow Money and USDA fund-

ing, Re:Vision was awarded $1.2 million from Denver’s OED for the acquisition of a

75,000-square-foot commercial site on Morrison Road, an industrial thoroughfare that

is being revitalized into a destination for healthy and culturally vibrant food and art. Our

capital campaign for the project enters a new phase in October 2014, when we will start

raising $5.5 million toward the construction and redevelopment of the site, which will

feature a 12,000-square-foot grocery store, commercial kitchen, and food hub, and a

10,000-square-foot commercial greenhouse.


36

TS DESIGNSEric Henry

TS Designs is a sustainable, triple-bottom-line apparel company that is promoting the

cultivation of organic cotton in North Carolina.

After the 1993 implementation of NAFTA, TS Designs watched its customers flood to

Mexico for lower labor costs. Instead of following many of our peers and calling it quits,

CEO Tom Sineath and I shifted to a triple-bottom-line business model, focusing on

People, Planet, and Profits. In January 2008, we went on to meet the rigorous standards

of social and environmental performance, accountability, and transparency required to

become a certified B Corporation in North Carolina.

I wanted to go further and manufacture apparel made entirely of organically grown N.C.

cotton—cotton grown, spun, woven, and sewn in North Carolina—creating a truly local

“Dirt to Shirt.”

In 2011, we convinced a few N.C. cotton farmers to plant 50 acres of organic cotton.

We hoped that the next year, they would be willing to go to 70 acres, maybe 1,000 the

next year, then 3,000, then 5,000. Before long, we dreamed, it would be rare to find con-

ventional Roundup Ready cotton seeds being planted in North Carolina.

But to get started, this plan required capital. In December 2011, the first organic cot-

ton of this century was harvested and ginned in North Carolina. It met the standards

TS Designs needed to produce quality yarn for T-shirts, and I immediately called Slow

Money N.C. founder Carol Peppe Hewitt.

“We’ve got 25,000 pounds of cotton that we can make into 37,000 shirts,” I told her.

“But the farmers need to be paid now.” I had 45 days before the cotton would be sold on

the open market. “Once the shirts sell,” I explained, “we can pay the money back. This

year, the farmers planted 50 acres of organic, next year they want to do more, but only

if they get paid on time. By utilizing our own local organic cotton, manufactured in a lo-

cal, transparent supply chain, we can make the most sustainable apparel in the world. Can

Slow Money help?”

We needed $30,000. Carol made a few phone calls, and five friends and supporters

of TS Designs enthusiastically stepped up to loan $6,000 each. They called themselves


37

The Cotton Club, and they financed the 45-day window that we needed to secure that cot-

ton. Within days, the farmers got their money, our money, Slow Money. That’s $30,000

less for the stock market, and $30,000 more in local, community financing.

TWO FARMERS FARMDominic Pascarelli and Linzee Weld

In Maine, unlike many other places in the country, the number of farms is increasing

and the average age of farmers is declining. We are part of that trend.

After an extensive search, we found landowning partners of a historic farm property

on Rte. 1 in Scarborough, the commercial artery of coastal Maine. Two Farmers Farm

has a seven-year rolling lease on five acres of flat farmland with good access to water and

the option to lease more acreage in future years.

We have taken good advantage of Maine’s lending ecosystem. We first secured a

line of credit through Maine Organic Farmers and Gardeners Association (MOFGA)

and Bangor Savings Bank as a cash flow backstop. To date we have not had to draw

down this line of credit. At a Slow Money Maine gathering in January 2013, we de-

scribed our strategy and presented our business plan. We connected with members

of Maine’s two Slow Money investment clubs, Maine Organic Lenders and No Small

Potatoes. Maine Organic Lenders was able to meet the bulk of our financial needs and

No Small Potatoes closed the gap with a microloan. In 2014, we secured additional low-

interest debt from the USDA Farm Service Agency to expand our on-farm infrastructure.

With support from Slow Money lenders, we were able to expand our operation from

one-tenth of an acre of winter greens to an acre and a half of veggies for year-round

sales. Tractor implements, a seedling greenhouse, power- and water-line extensions,

and a market vehicle are a few of the essential purchases that these loans supported. But

equally valuable has been the multifaceted network of passionate advocates that we “two

farmers” are now connected to through MOFGA, Maine Organic Lenders, No Small

Potatoes, and Slow Money Maine.


38

VERMIVISIONRalph Crevoshay

When VermiVision presented at the Slow Money entrepreneur showcase in 2011, our

business vision was to establish a series of worm compost production facilities on

the West Coast, principally to serve growers in both conventional and organic food

production.

Our goal was nothing short of transforming the ways and means of agricultural pro-

duction by weaning producers from reliance upon inorganic agrichemicals, reducing

water consumption, and rebuilding depleted soils.

To create worm compost on such a scale requires utmost consistency, reliability, and

replicability of inputs. Worms do indeed work miracles in abetting organic material de-

cay, but without rigorous control of their dietary feedstocks, compost made by worms

cannot be used by food growers for many reasons, but primarily food safety.

Although we developed links with the scientific community to validate the efficacy of

high-quality worm compost and gradually began to enlist growers in field trials, the eco-

nomic barriers to establishing the worm compost production facilities needed to serve a

growing market were daunting.

To advance our goals, VermiVision has merged with Worm Power of Avon, New

York, the nation’s largest producer of high-quality worm compost. This merger will en-

able technology transfer and other efficiencies, so that more early adopters of worm

compost can realize improvements to crop yields, water savings, and pest and disease

resistance.

39

STORIES FROM FOOD

INVESTORS

THE 2FORKS INVESTMENT CLUB Susan Brady

Our name comes from the two river valleys that shape the agricultural production of the

mid-Colorado mountain region—the Roaring Fork and the North Fork.

2Forks is the first nonprofit investment club in the Slow Money network. While the

other clubs are organized as for-profit LLCs, 2Forks capital comes in as donations. We

will make 0-percent loans, and return of principal will be recycled in future loans. We

currently have 15 members, who have made capital contributions ranging from $10,000

to $250. We will begin making loans when we reach initial capitalization of $100,000,

which we anticipate will occur soon.

The nonprofit investment club model appeals to us for several reasons. Most impor-

tantly, it puts long-term impact front and center. It helps keep thoughts about such mat-

ters as transaction costs on the back burner, rather than on the front burner. It shifts our

thinking from what we are taking out to what we are leaving in.

If we are truly committed to bringing money back down to earth, then we are going

to have to create new models that reconnect us and get money flowing in radically new

ways. We hope the 2Forks Club can make a valuable contribution to this process and

grow—gradually, slowly, over coming generations—into a meaningful participant in the

local food community here in these beautiful valleys.

40

STORIES | INVESTORS

CAROL PEPPE HEWITTSlow Money North Carolina

For the past few years, it has been my privilege and pleasure to steward the emergence

of a network of investors and entrepreneurs under the banner of Slow Money North

Carolina. As a group, we’ve facilitated the flow of more than $1.2 million from over 90

investors to 60 farms and food enterprises.

You can see a photo and read about each of these entrepreneurs on the Slow Money

North Carolina website. I’m proud that my own money helped several of these busi-

nesses, and I am just getting started.

Why is being part of this movement—this Slow Money movement—so engaging and

rewarding?

There is power in money. Every day, even every second, strangers in faraway places

are making decisions about my money. The money in my checking, savings, and re-

tirement accounts is controlled and put to use at the mercy and the discretion of people

who may or may not share my world-view, my values, my beliefs about what is right and

wrong. I wouldn’t hand them my wallet and say, “Just buy what you want,” yet I do that

every day with my life savings.

While my investments all classify as “socially responsible,” that’s not enough.

What I really care about is my health, my family, my relationships, and the people in

my community. I also believe there is a crucial need at this time in history to support

sustainable farmers and local food entrepreneurs, and to care about our planet. And I

believe we have a moral imperative to address the harmful impact of climate change.

When the topic of investment comes up, the pull is to talk about how to maximize

monetary gain. But what I want to maximize are equally, if not even more important,

gains—like the survivability of our local food systems and long-term planetary soil

fertility.

Making affordable Slow Money loans to sustainable farmers and local food entrepre-

neurs gives me a concrete way to work toward those goals.

In 2011 I loaned Angelina $3,000 to expand her farm-to-table Greek restaurant. Then

I invested $25,000 in the refinance of our local food co-op. I loaned $1,500 to Patrick, a

local cheese monger, and $6,000 to Eric to finance the first organic cotton grown in this

century in North Carolina.

STORIES | INVESTORS

41

Most recently I loaned Alvin $6,000 to buy a used tractor. The bank was happy to

loan him $40,000 for a new tractor (that he really didn’t need and would put him much

deeper into debt) but for a used tractor, zero.

These are not strangers. These are my friends. Over the last four years, my husband

and I have moved about $100,000+ into local loans. About $1,200 will most likely not be

repaid, as one of the eight businesses has closed, unable to repay its debts. But that’s a loss

I am happy to absorb as I build a stronger, more resilient local economy. Of the $100,000,

about $30,000 has already been repaid, and some of that has been loaned out again.

My next step is to loan out the money in my newly opened self-directed IRA to busi-

nesses in my community that I care about and want to help survive and thrive. To peo-

ple I know.

Because it matters, and it gives me joy. Is there a better reason than that?

CASTANEA FOUNDATIONTim Storrow

The Castanea Foundation (CF) was started in 2006 with a mission to conserve and pro-

tect agriculturally productive and environmentally significant land and water resources

in select areas of Vermont and New York State. The Foundation has provided a suite of

grants, loans, and other assistance designed to conserve productive agricultural land and

foster farming’s economic viability.

A hallmark of CF’s approach has been to identify specific needs or gaps in the field

and develop a “customized approach” that addresses those gaps. In the process, the

Foundation has sought to bring new best practices to the field, create ongoing collabora-

tions, and build the capacity of farming and food production enterprises in our region.

Since 2006 Castanea has deployed approximately $22 million across a broad array

of projects. As the Foundation focuses its work going forward, its goal is to continue de-

ploying capital in a suite of projects, and as those projects mature, recover as much of

its capital as possible to continue supporting additional projects. The Foundation mea-

sures success in terms of impact, rather than maximizing financial return, but at the

same time holds its borrowers and project partners to a high degree of accountability

STORIES | INVESTORS

42

and seeks to recover as much of its invested capital as possible.

As the Foundation approaches the end of its first ten years in operation and consid-

ers its future role, the Board and staff decided it was time to take a qualitative look at the

stories and lessons behind the numbers. In 2014, an independent, third-party evaluation

based on interviews with a number of grantees, borrowers, and practitioners in the fields

of agriculture and food systems was completed.

A number of common themes regarding Castanea’s engagement emerged from this

investigation.

First, our ability to do both grants and investments, sometimes on the same project,

is seen as a core strength. Building the food system means growing food businesses.

Castanea is one of the few players in the field that connects the worlds of philanthropic

funders and investors.

Second, in both grant making and investing, Castanea is credited for its willingness

to take risks. In grant making Castanea has been willing to bet on organizations with

new or innovative projects and build the capacity of organizations. As an investor in agri-

cultural businesses, Castanea has been willing to launch new businesses to address gaps

in the sector. And in land conservation, Castanea is highly regarded for its willingness

to bridge gaps, take subordinate positions on loans, and invest in needed infrastructure.

In all three areas Castanea’s approach has made it easier for other funders and investors

to come into projects.

Third, people see the foundation as playing an important and leading role in support-

ing agricultural enterprise development, and in ensuring that farm and food enterprises

can succeed as viable long-term businesses. People see value in Castanea’s strategic in-

vestment activities in enterprises along the supply chain. And they believe Castanea

plays an important role by holding funding recipients, whether businesses or NGOs,

accountable for developing enterprises with solid business planning and rigorous finan-

cial management.

Castanea is regarded as one of the few foundations (or investors) that is actively think-

ing about and engaged in the food system and its relationship to working landscapes.

With that perspective the Foundation is able to invest in projects along the whole spec-

trum of the issue, thinking strategically about how specific investments can move the

sector. As one friend of the foundation observed: “A lot of food funders ignore land, and

STORIES | INVESTORS

43

a lot of environmental funders ignore people and their ability to make a living from the

land. Castanea sees both.”

Our approach has required a high level of engagement and a tolerance for failure,

but it has yielded some models and successes in the field, including Vermont Livestock,

Cellars at Jasper Hill, the Vermont Food Venture Center, Ayers Brook Goat Dairy, and the

Equipment Leasing Project. Our approach also requires expertise in terms of negotiat-

ing deals, supporting business planning, and providing technical assistance. Sometimes

this support is provided directly by staff; other times the foundation hires experts.

Looking ahead, we believe the single largest challenge to building a sustainable food

system is finding a workable scale for farms and food business enterprises that can pro-

vide a family living to the owners and operators, while keeping land in productive and

environmentally sound uses.

CLAUDE ARPELSSlow Money NYC

As I sit at my desk in Chatham, New York, looking out the window at a squirrel who

is painstakingly strategizing as to how to get the bird food that I have just made squir-

rel-proof (by replacing the chain from which it hangs with a slick wire), parallels with

sustainable investing come to mind. Clearly, we, the sustainable investors, are the squir-

rel and our economy has been squirrel-proofed.

I approached Slow Money investing about three years ago with a hope of being able

to make investments that earned low financial returns but commensurately invited low

levels of risk. Instead, I find myself regularly confronted with the unsavory combination

of low returns and high risk. I wrestle with the question of whether the nonfinancial re-

turns should outweigh the financial ones. Should we approach this kind of investing as

a different form of philanthropy? One in which we get some of our money back, some-

times? Or should we look at it as a variant on the classic venture portfolio, where one or

two of the investments will have outsized success and generate returns that will make

up for all the other failed bets?

In my unstoppable desire for sustainable solutions, I am not satisfied with either of

STORIES | INVESTORS

44

these options. I keep looking for that balance between financial and nonfinancial returns

and risk, and I ask myself some fundamental questions.

To simplify the financial considerations and put them in the proper perspective, I find

myself returning to outmoded financial metrics. Today’s MBAs might find it laughable,

but to me, the most important financial measure in a Slow Money project is break-even.

I am not interested in IRR, EVA, NPV, etc., considering these measures are designed to

compare and maximize profitability. I look for old-fashioned profitability, and quickly.

Profitability = economic sustainability = freedom to decide what is best for the business,

which could be: more growth, more impact, more of the same?

Then what? It has become a basic assumption that new businesses must have an exit

strategy. In my mind, this is one of the most corrupting forces in our economy. Like so-

phisticated financial valuation measures, it is designed to maximize and accelerate re-

turns. I wonder if an exit strategy is antithetical to sustainable business?

OK, now one of the squirrels figured out how to get at the bird food. He hangs off the

branch from his hind legs, like a bat, and reaches the wire from which the basket of food

hangs, pulling it toward him. Now he is devouring the food in this upside-down posi-

tion, and he is telling me that I have misunderstood my own metaphor. We are the birds,

for whom the food was intended, to feed a multitude over a long period. The squirrel,

and his friend who is now copying him, has found a complicated way to usurp this food.

The two squirrels eat it all in a matter of minutes, leaving just crumbs for the woodpeck-

ers, who are watching warily from a distance.

This is going to be even harder than I thought.

CREDIBLESArno Hesse

Credibles is a San Francisco–based start-up that brings investing in food businesses

down to earth in a number of fundamental ways.

1. Customers pay for food purchases in advance. Businesses pay back the edible loans in goods and services.

STORIES | INVESTORS

45

“The concept is simple: Customers prepay for food and receive edible credits to use

like a gift card. Large prepayments can even earn edible interest. In the meantime,

food businesses get the money they need to grow.” –Yes magazine

Using Credibles, local food businesses borrow funds from their customer com-

munity, instead from financial institutions. In its first year, Credibles has engaged

with 100 food businesses, some of them raising funds in the $20,000 to $100,000

range. The average customer funding has been in the $300 to $400 range.

Instead of repaying a bank loan with cash from sales, edible credits are paid back

with products customers can grow or cook themselves. (Can money be any slower?)

Since the repayments are at Cost of Goods Sold, the economics are far more favorable

for the businesses than cash, allowing them to throw in bonus credits as rewards.

“Well, I was skeptical at first if people would put money down up front, but Credibles

really hit it out of the ballpark!” –Paul Geffner, co-owner of Driver’s Market

2. Through Credibles, investing in your local food systems is available to everyone.No longer are investments in the local economy only for angel investors or philan-

thropists. New investment vehicles like a Direct Public Offering allowed enterprises

like People’s Community Market in West Oakland to lower the entry level to $1,000.

With Credibles, they were able to offer their community members the opportunity

to fund their venture with amounts as low as $50. Through the daily act of food buy-

ing and eating, all people can direct capital flows into their community and the busi-

nesses they want to see flourish. It’s Community Underwriting in action.

3. With the Credibles apps for businesses and customers, edible credits have become a daily affair.Edible credits are eaten over time, literally. At Zocalo, a San Leandro, California, com-

munity coffeehouse, they have been redeemed close to 1,500 times. With free apps

for businesses and customers, it’s easy and secure for both sides to track and trans-

act their Credibles over time. With no card or wallet required, the transaction costs

are lower.

STORIES | INVESTORS

46

“A seamless and pleasant experience. How ideal it would be to do all my food shopping like

this.” –Gianna Banducci, Portland, Oregon

4. Prepayments strengthen the relationship between food businesses and their customers.At many participating businesses, 50 to 100 customers have “opened a tab” with

Credibles. Early reports show that the businesses see the Credibles customers more

often after they invest with Credibles, often one-and-a-half or two times as often. With

the Credibles app, the staff learns the names of the regulars. After they have “eaten

their credits,” most customers come back for another funding. Driver’s Market, an

all-organic and non-GMO grocery in Sausalito, California, calls their prepaying in-

vestors “Designated Drivers.” Many of them already have had five or more “refills”

of Credibles.

The connection is about more than money. For significant prepayments, Flying

Fish of Portland, Oregon, has promised funders to take them out on one of their fish-

ing trips.

5. At Whole Foods Northern California, Credibles is moving the money up the food chain, literally.As part of its commitment to “local,” Whole Foods Market in Northern California

has started to accept Credibles as a form of payment at the cash registers of all 40

stores. The prepaid funds move up the food chain, directly to the local producers (not

to Whole Foods). Foodmakers like Saint Benoit Creamery and Farmhouse Culture

receive working capital for their ingredients and equipment, long before customers

purchase their products. Redeeming local investments at the grocery checkout is a

milestone for bringing money down to earth.

STORIES | INVESTORS

47

FAIR FOOD FUNDAlex Linkow, Program Director

Across the nation, interest in local food is booming. In fact, according to the U.S.

Department of Agriculture, “locally and regionally grown food has become a $7 bil-

lion-per-year market.” However, even with over 8,000 farmers’ markets and more than

12,000 Community Supported Agriculture (CSA) operations, direct farm-to-consumer

sales still account for less than 1 percent of total farm sales in the United States.

At Fair Food Fund, we believe in the power of farmers’ markets and CSAs to build

community, support small farms, and bring great, local food to consumers who can ac-

cess it. We also believe that building a healthy and sustainable food system and sup-

porting the long-term viability of our small- and mid-scale farms requires investment in

the regional processing, distribution, and technology infrastructure that connects farms

with wholesale buyers and consumers who demand local food.

This infrastructure includes businesses like The Pickup, a multifarm CSA and local

food café, and Maine Grains, a local, artisanal grain milling enterprise, both of which

operate out of a former county jail in Skowhegan, Maine, that now houses a cluster of

innovative, small businesses; Common Market, a Philadelphia-based distributor of local

foods to schools, hospitals, grocery stores, and other wholesale customers throughout

the Delaware Valley; and Northern Girl, a business that purchases and minimally pro-

cesses root crops from farms in Aroostook County Maine, and sells them to retail stores

and institutions across New England.

Fair Food Fund invests in food system businesses in the Northeastern United States

by providing a combination of financing and business assistance—business assistance

to build entreprenurial capacity, position good food businesses for growth, and provide

financing to fuel that growth. Our Business Boot Camp provides three days of intensive

training to selected food system entrepreneurs, and our Consulting Corps program of-

fers funding for one-on-one business assistance. When good food enterprises are ready

to grow, we work to structure financing to meet their needs.

Ultimately, our goal is to support the growth and development of the next genera-

tion of food system entrepreneurs and in doing so to support current and future gener-

ations of small and mid-scale farms, and we’re only just beginning. As we’ve witnessed

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48

more of the myriad challenges that emerging good food businesses face, we are plac-

ing additional emphasis on business assistance, both in advance of financing and post-

financing. We believe that linking and coordinating financing and business assistance

throughout the early stages of an enterprise’s life cycle will help more good food enter-

prises weather the inevitable storms and capitalize on the right growth opportunities.

This strategy requires a hands-on, hands-dirty approach, and we very much look forward

to continuing to dig in!

FARMWORKSLinda Best

Shareholders in FarmWorks Investment Co-operative Limited are helping to create

employment and increase production and profitability in the food sector in Nova Scotia.

In June 2009 I heard Khalil Akhtar, a food columnist for the Canadian Broadcasting

Corporation, talking about Slow Money. I had previously organized a meeting called

Investing Close to Home, with presentations including the Nova Scotia Community

Economic Development Investment program. Learning about Slow Money, I was inspired

to start putting the two together, and that was how the idea for FarmWorks was born.

FarmWorks was established in 2011 to promote and provide strategic and responsi-

ble community investment in food production and distribution, in order to increase ag-

ricultural and related economic activity and provide access to sustainable local food for

all Nova Scotians.

Shareholders who choose to hold investments for 15 years in FarmWorks Community

Economic Development Investment Fund (CEDIF) will receive cumulative Provincial

tax credits of 65 percent in addition to dividends paid in five-year installments. Invested

funds are used to provide subordinated debt to farms and food-related businesses.

Applicants’ values and goals must align with FarmWorks’, and extensive due diligence

is required before loans are made. Protection of shareholder investments in FarmWorks

is paramount.

Within the first 30 months, $721,000 has been raised in three offers and $637,000

has been loaned to 27 food-related businesses. The remaining funds will be loaned to

STORIES | INVESTORS

49

other applicants as due diligence procedures are completed. Payment of the principle

and interest at 6 percent commences three months after the loan is approved. No fees

are charged for applications or early repayment, and Directors and Advisors provide

mentoring and promotion as appropriate.

A survey carried out at 18 months indicated that the first 18 businesses receiving

loans created 20 full-time and six part-time jobs, in addition to the 21 full-time and 14

part-time positions held in their businesses by the owners themselves. For start-up and

young businesses, roughly 25 percent of their total capital came from FarmWorks.

Nova Scotia has food-related challenges. The loss of farms and infrastructure result-

ing from importation of foods that once were grown here has negative socioeconomic

impacts, as money and multiplier effects are removed from the economy. FarmWorks is

helping to chart a path for growth by investing in food production—a key determinant

of the health of people, communities, and the economy of Nova Scotia.

FRESH SOURCE CAPITALLisa Sebesta and Dan Pullman

“You really need to look into Slow Money.” That advice, given to me during lunch over-

looking the harbor in Portsmouth, New Hampshire, set my career in a new direction.

And I haven’t looked back since.

After attending my first Slow Money Entrepreneur Showcase in Boston, I was

hooked. Inspired by the entrepreneurs that presented, I wanted to get more involved. I

joined Sprout Lenders, an investment club focused on helping local food entrepreneurs

in Boston. Among the kindred spirits I found there, was Dan Pullman, former invest-

ment banker and operating executive turned local food investor. Realizing we shared a

goal to mobilize more capital from private sources into the local food sector, we formed

Fresh Source Capital in the summer of 2013.

The mission of Fresh Source Capital is to invest in companies that are rebuilding re-

gional, sustainable food systems. Having had long careers in financial services, Dan and

I each saw a trend toward impact investing. Motivated by a desire to use their investment

capital to positively influence the environment, their local community, or traditionally

STORIES | INVESTORS

50

disadvantaged groups, investors are looking beyond conventional fund offerings. What

we saw, and what Slow Money promotes, is a way to do just that—through the food

system.

While investors are clamoring for it, many financial advisors don’t have the resources

or know-how to meet their clients’ needs in an efficient way. By focusing exclusively

on the food sector, we leverage our networks in the for-profit and nonprofit worlds to

source investment opportunities and share best practices with other investor partners.

We bring expertise in due diligence, evaluating each opportunity on mission and impact

criteria in addition to financial metrics.

For entrepreneurs, Fresh Source aims to fill a gap in capital availability. We see many

viable, successful businesses that may not be able to get bank debt to support their

growth plans and that are not candidates for traditional venture capital investment. By

offering subordinated debt and royalty financing (or revenue-share agreements), we can

meet their expansion financing needs.

We think we are in the very early stages of the impact investing movement in food

systems. As consumer demand for local, sustainably sourced food grows—both from

individuals as well as institutional buyers—the need for capital investment to meet

that demand remains high. Along with our collaborators at Slow Money, and other re-

gional and national funds, we plan to be there for the entrepreneurs who are rebuilding

this space.

LOCAL ECONOMIES PROJECT OF THE NEW WORLD FOUNDATIONBob Dandrew

LEP’s mission is to foster a more resilient food system, one in which economic, social,

and ecological needs are in balance. To achieve this vision we provide grant funding,

facilitate direct investment to move more capital from Wall Street to Main Street, and act

as a collaborator with others who share our goals. Our work is divided among three stra-

tegic initiatives: our Farm Hub, Food Hubs, and Community Education. Over the past

STORIES | INVESTORS

51

five years, we have deployed approximately $10 million in grants, facilitated $4 million

in direct investments, and launched a 1,255-acre research and training farm.

FARM HUBWith the goal of strengthening agriculture and training the next generation of farmers

in the region, Local Economies Project created the Hudson Valley Farm Hub. The Farm

Hub is a nonprofit center for professional farmer training, research, and demonstration

in Ulster County, New York. Here, Hudson Valley farmers will be assisted with access

to markets, land, and the training they need to meet the challenges presented by today’s

global food system. Our innovative crop research program is designed to help move

regional agriculture into a robust future.

FOOD HUBSBy focusing on local value chains, we aim to foster a collaborative and transparent eco-

nomic system with an eye toward shared value. Through our Food Hubs initiative, we

are investing in the infrastructure and relationships to connect local farms to high-value

markets. These include grants to programs such as Farm to Institution NYS (FINYS)

and Cornell Cooperative Extension’s Good Agricultural Practices (GAPs) farmer train-

ing. LEP has also invested in Farm to Table Co-Packers, a value-added food proces-

sor partnering with local farms.” Lastly, LEP is exploring new programming to deploy

patient capital in the food system, building regional infrastructure and supporting farms.

COMMUNITY EDUCATION Many consumers are unaware that the real cost of food is not reflected in our current

market. To ensure farmers can make a living and their workers earn a fair wage, the

connection between consumers and food must be strengthened. To do this, we are sup-

porting programs that educate youth and communities about the food system. We have

provided grants for farm-to-school programs and for the development of middle- and

high-school curricula in food science and agriculture. In addition, we are funding orga-

nizations that bring local food to underserved communities. Through these initiatives,

we hope to engender meaningful connections to our food, the people who produce it,

and to one another.

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52

LOCAL FOOD SHIFT GROUP AND LOCALIZATION PARTNERSMichael Brownlee

If a local food revolution is indeed unfolding in our midst (as I think is undeniable), it’s

worth asking ourselves how such a revolution gets funded.

A 2012 study by community economist Michael Shuman suggested that for Colorado

to achieve 25-percent food localization some $1.8 billion would be needed to capitalize

the effort, mostly to increase local production capacity and rebuild needed infrastruc-

ture for aggregation, processing, storage, distribution, and marketing—a daunting task.

Once investment capital became available to our nonprofit organization, through a

courageous ten-year no-interest loan from an individual inspired by Slow Money, we

formed Localization Partners LLC as an investment subsidiary and turned our attention

to the need for infrastructure as the most urgent need for capital. We knew that our lo-

cal farmers and ranchers struggled with getting their products to a rapidly growing mar-

ket for local food.

We had known local logistics entrepreneur Aaron Perry since 2005, the year our or-

ganization began and the year he founded Boulder-based recycOil to collect used cook-

ing oil and grease from restaurants and institutional kitchens and then recycle the waste

products into biofuels. After recycOil had built a thriving business, Aaron and I began

meeting regularly to explore how to leverage what he and his team had learned into a lo-

cal food distribution venture. With their expertise in logistics and our own broad experi-

ence in local food, we had a match.

Gradually, our conversations grew to include advisors and board members, and a

solid vision came into view. We conducted interviews with producers and buyers, and

analyzed the results. A business plan went through several drafts, and we finally ham-

mered out an agreement whereby Localization Partners would provide the start-up cap-

ital for SOURCE Local Foods as a loan, in the spirit of Slow Money. We had originally

considered an equity position, but concluded that a straightforward loan would be more

appropriate. At the time, there were no other capital sources who would have been will-

ing to take such a risk.

Now completing their second full year of operation, SOURCE has quickly become

a second-stage company with revenues well in excess of original projections. They are

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53

on their way to becoming a significant player in the emerging local food industry in

Colorado, and we are thrilled with their growing success. Yes, in the long run we prob-

ably could have “made more money” as an equity partner, but we feel that this start-up

loan was more consistent with Slow Money values and got the enterprise firmly on the

path to sustainable growth.

This perhaps illustrates one way real revolutions get funded—by people with passion

and vision, willing to muster great courage and take unusual risks, willing to invest in

deep relationships in service to a greater purpose.

MAINE HARVEST CREDIT UNIONScott Budde and Sam May

Since October 1, 2013, the Maine Harvest Credit Union (in organization) has been for-

mally exploring the creation of a specialized credit union to support the growth of small-

scale, sustainably run farms and related businesses in Maine. Building on previous

work and under the auspices of Maine Organic Farmers and Gardeners Association and

Maine Farmland Trust, we conducted a series of in-depth, in-person financial interviews

with 36 small farms and local food businesses in Maine.

These interviews covered the history and workings of interviewee goals, operations,

and financial relationships. In particular, we sought to understand any financing re-

quirements that were not being met by existing sources. In fact, “getting appropriate

financing” was the most often cited challenge by the interviewees in our Phase 1 work.

We then supplemented these interviews with a wide range of stakeholder meetings that

included political leaders, government credit union regulators, and executive directors

of key related organizations and government programs.

We also found trends that seem likely to make the financing situation faced by Maine

farmers worse: increasing restrictions in the conventional mortgage market, the loss of

Farm Credit of Maine as an independent entity, and increasing funding pressures on

federal programs. Based on this research we now believe that establishing the Maine

Harvest Credit Union will fill critical financing gaps.

STORIES | INVESTORS

54

MARCO VANGELISTISlow Money Northern California

Local investing is about intergenerational justice.

I worked in finance for about 20 years, the last six of these managing investment

portfolios for institutional investors. As fiduciaries we were tasked with preserving and

growing the capital of our clients. Our fiduciary duties were discharged by delivering fi-

nancial returns with moderate risk by investing in our area of expertise.

Many of our clients were foundations, and no one seemed concerned that some of

the investments we were making on their behalf caused or worsened the very social and

environmental problems those foundations were created to address. A case in point was

one of our best performing stocks, a Malaysian palm oil company that had destroyed

tens of thousands of acres of original rain forest and replaced it with a monoculture of

palm oil plants. These operations destroyed the Borneo habitat of the orangutan, yet a

few of our clients were environmental foundations trying to protect such habitat with

their grants!

I realized the narrow lens of conventional finance that reduced all decision making

down to considerations of risk, return, and liquidity was blinding us to the impact our

investments were having on communities and ecosystems around the world. My own

portfolio, through diversified mutual funds, was invested in companies whose behavior

I found objectionable—I was funding the very activities I objected to and benefiting fi-

nancially from those misdeeds!

I realized that through my traditional investments I was involved in a massive inter-

generational injustice. The financial returns I relied upon to provide for my comfortable

retirement came at the expense of future generations, since a large part of those returns

were predicated on extractive activities that diminished the natural capital future gen-

erations will need to survive. I therefore had to overcome my own worries about loss of

financial return, diversification, and liquidity and align all my investments with my val-

ues. It meant liquidating my entire portfolio and starting the process of deploying the

capital in projects aligned with my personal values.

In the last five years I have been involved in direct funding of mostly Slow Money en-

terprises in Northern California where I live. The process has called for an investment

of time as well as money, because direct investing requires taking a close look at each

STORIES | INVESTORS

55

business or project and, at times, advising the entrepreneur receiving funding. And yes,

local investing can be risky. I experienced investment losses in two areas: pre-revenue

start-ups and direct personal loans to entrepreneurs whose character I did not know well

enough. But it can also be greatly rewarding. Seeing thriving local businesses and know-

ing your investment had a part in their success is wonderfully gratifying.

Local investments are also investments for the long haul because there is no devel-

oped secondary market that could provide liquidity (the ability to sell the investment to

someone else for cash). Risk, liquidity, a steep learning curve, and time commitment

are the primary challenges facing a realignment of our values with our investments, yet

such realignment is the moral imperative of our time and our responsibility toward fu-

ture generations.

NO SMALL POTATOESLinzee Weld

Slow Money Maine’s robust peer-to-peer lending network has spawned two investment

clubs that lend to farms and food businesses. Each club is organized differently to meet

members’ needs. No Small Potatoes (NSP), which pioneered the Slow Money invest-

ment club model in 2011, pools members’ investment capital, and members decide

collectively how to loan club funds. In Maine Organic Lenders, loan applications are

reviewed by the group, but members decide individually at what level each person wants

to participate in a loan, if at all.

No Small Potatoes Investment Club now has 19 members who each have invested a

minimum of $5,000 in the club. NSP makes microloans of up to $10,000 to farms and

small food businesses that source predominantly from local farmers (no chocolate com-

panies in our portfolio!). To date we have made 29 loans totaling more than $140,000 to

21 farms and small local food businesses. Maine Organic Lenders members will lend up

to a total of $25,000 per borrower. In its first year and a half of operation, Maine Organic

Lenders members have loaned $87,500 to six borrowers.

Both No Small Potatoes and Maine Organic Lenders benefit from doing due dili-

gence as a group. The groups can consider more loans than an individual can: There are

STORIES | INVESTORS

56

more people to share the workload. Both clubs send teams of members out to visit loan

applicants to gather more information and learn firsthand about the business. In each

club the members gather to discuss the merits of making a loan, benefiting from mem-

bers’ different experiences and perspectives.

No Small Potatoes and Maine Organic lenders have financed vehicles to bring pro-

duce to markets, milking parlors, cheese rooms, cows, tractor attachments, cold-storage

units, butchering equipment, and working capital needs. Both clubs learn from each

other’s evolving practices and continue to modify club protocols to better serve farmer

and small business needs and to work more efficiently.

Overall, No Small Potatoes and Maine Organic Lenders are … small potatoes! The

clubs have lent 6 percent of total funds lent by Slow Money Maine (not including the

grants and equity investments SMM has catalyzed). However, the clubs’ borrowers ac-

count for 37 percent of the farms, fisheries, and small businesses in the Slow Money

Maine loan portfolio.

In Maine we are experimenting with several models for making Slow Money invest-

ments. In addition to the investment clubs and peer-to-peer lending, we are studying

starting a credit union and are collaborating with Boston investors who are starting a lo-

cal food investment fund (Fresh Source Capital). We are working with philanthropists

and foundations that are making loans through their foundation endowments. Each

model has differing degrees of hands-on personal involvement and works for different

people’s preferences. There is strength in a diverse local investing ecosystem!

RSFJillian McCoy

RSF Social Finance has an established history of financing a wide variety of businesses

working in sustainable and organic food and farming. In the last few years, we have

started to look more closely at how capital can impact those that are driving systemic

change in what we eat, how our food is produced, and how food systems can support

strong, resilient communities.

STORIES | INVESTORS

57

If we’re going to fix our broken food system so that it delivers healthy food to the

whole population while enabling farmers to make a decent living, we’ll need new mod-

els and alternatives across the entire supply chain. The most potentially transformative

enterprises, however, often face the greatest funding hurdles. Throughout our 30-year

history, we have had to turn away many impactful organizations that could not yet qual-

ify for loans due to a lack of collateral or cash flow to carry the type of debt-financing that

RSF provides. We have learned that without more creative and thoughtful approaches

to capital, particularly in the early stages of development, entrepreneurs are not able to

build the food system that all of us want to see.

To build this system, we need to rethink the purpose of capital and employ an in-

tegrated capital strategy. Integrated capital is the coordinated and collaborative use of

different forms of capital (equity investments, loans, gifts, loan guarantees, and so on),

often from different funders, to support a developing enterprise that’s working to solve

complex social and environmental problems.

Through RSF programs like the Local Initiatives Fund (LIF) and Program Related

Investing Fund (PRI), as well as collaborations with other funders in the space, we

have been able to explore our integrated capital approach. A great example is Common

Market, which provides a distribution link between threatened Delaware Valley farms

and urban communities that lack access to fresh foods. The enterprise has grown rapidly

through a series of integrated capital financings, the most recent one enabling the pur-

chase of a $945,000 warehouse space that significantly increased its capacity. Common

Market at the time (2012) was not large enough to support the mortgage loan, but RSF

was able to fund it with the backing of $350,000 in pledge contributions (which can be

called upon in case of default) from W.K. Kellogg Foundation, the Claneil Foundation,

and the 11th Hour Project; a $35,000 guarantee from the Common Market community

placed as an investment in the RSF Social Investment Fund; a $250,000 RSF LIF guar-

antee; and a $100,000 LIF grant. This combination of funding helped to collateralize

the loan and establish monthly debt payments that were more manageable for Common

Market’s cash flow.

The warehouse has enabled Common Market to exponentially increase its product

stock, which translates into increased purchases from local producers and more good

STORIES | INVESTORS

58

food for those who need it. Common Market has also used the expanded facility to pro-

vide affordable shared space for other food entrepreneurs, creating an ecosystem that re-

inforces shared values around remaking the food system.

There is a real opening now for vastly greater collaboration between investors (indi-

viduals, networks, and firms), foundations (community and private), and community

banks. As intermediaries working in social finance, it’s up to us to create a finance infra-

structure that enables food entrepreneurs—and the communities they serve—to thrive.

SLOW MONEY | PO BOX 2231 BOULDER, CO 80306 | 303.443.1154 | WWW.SLOWMONEY.ORG | WWW.BEETCOIN.ORG

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